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Irvine lawyer sentenced in $20-million investment fraud

An Irvine securities lawyer who authorities said teamed with an insurance agent to bilk scores of investors out of more than $20 million has been sentenced to seven years in federal prison.

Jeanne Rowzee, 53, and 65-year-old James Halstead, who already is in prison, solicited tens of millions of dollars from individual investors who ran the gamut from wealthy developers to retirees on fixed incomes.

The pair promised to put the money into securities known as private investment in public equity, or PIPEs, which they said would return as much as much as 35% in as little as three months, prosecutors said.

The two had met in the early 1990s, when Rowzee defended Halstead in another criminal investment-fraud case, in which he pleaded guilty and was put on probation, court records show.

Investors in the PIPEs fraud said Rowzee presented herself as an expert securities lawyer, and that Halstead seemed to be an affable and able salesman.

The money was supposed to be used to make bridge loans to companies that were in the process of obtaining long-term financing. Instead, Rowzee and Halstead lavished it on themselves and used it to make make bogus investment-return payments to other victims, court records showed.

When the scheme collapsed, about 140 investors had lost money, prosecutors said.

Halstead blew millions of dollars on everything from exotic dancers to real estate, including $353,000 on a Ferrari and a Porsche and about $1 million for a house near Las Vegas, records show. He pleaded guilty to federal fraud charges and in 2010 was sentenced to 10 years in prison.

Rowzee, who was charged with securities fraud and conspiracy, pleaded guilty in 2008. On Monday, U.S. District Judge Andrew J. Guilford sentenced her to 87 months in prison and ordered her to pay $25.4 million in restitution.

Investors, many of whom won an earlier $66-million judgment in a civil lawsuit, have said they have little hope of recouping their money.